To help customers reduce decision-anxiety, some firms are building their business models around fewer and simpler choices. For example, food retailer Trader Joe’s, one of the most profitable retailers in the U.S., carries 80% fewer items than most large grocery stores and still has a loyal following of customers. Other retailers are embracing simplicity, too: Office furniture maker Herman Miller has actively reduced the variations on its iconic Aeron chair. Clorox deploys cross-functional teams to continually prune its product portfolio, insuring that remaining products meet their volume targets. And Dell strictly limits the number of components in its computers as a way of controlling its customized assembly operations.
The narrowing of choices by these companies has not only made it easier for their customers but has also increased revenues and margins. With fewer products or services to promise, all of the associated supply chain, facility, and support processes can be slimmed down, saving considerable money and energy. Even automobile companies and airlines seem to have learned this lesson. General Motors’ process of shedding brands and narrowing down their product portfolio may have been painful, but this made it easier for buyers to understand the new GM and for the company to focus its resources on producing better cars. Similarly many airlines have cut routes and frequency of flights, giving them fuller planes and more efficient use of their assets.